Health & Fitness
Merchants: What the New Debit Card Rates Mean for You
Pin debit and Signature debits new rules for great saving to the merchant. Are you set up to take advantage of this awesome change?
Effective since Oct. 1 the Federal Reserve set debit interchange at 21 cents per transaction, plus 1-cent fraud charge and 5 basis points per transaction. This will only apply to banks with more than $10 billion in assets (an estimated 85% of all transactions). This will lower interchange costs for debit card transactions by roughly 50 percent but does not automatically lower merchant’s costs unless they are already on interchange plus pricing.
If you look at your credit card statements and are still seeing Qualified, Mid qualified, and None, then unfortunatly you are not taking full advantage of this major change in the processing industry. In the past merchants where advised to use Pin debit to save them money.
The reality of using pin debit was .20+ cents per transaction plus network fees which made that tranaction as high as .75 cents when all said and done. Well now it's much, much better. Based on an average ticket of $35 this is how it works whether it is pin or signature debit. (21 cents +.01 fraud=0.22) + (.05% X $35=.0175) =total cost .2375. That is more then half the saving for pin debit and even more for signature debit. Considering almost half of your transaction are debit or debit signature this should be huge saving for all merchants. Again, you must be set up correctly.
